The minimum employment period
Probation periods are typically used to assess a new employee’s suitability for both the job and the organisation and are usually for a six-month period but can sometimes be shorter or longer.
Probationary periods are often confused with the qualifying period or the ‘minimum employment period’ for unfair dismissal, which is six months (or 12 months if an employer is a small business with less than 15 employees) as set out in the Fair Work Act 2009 (Cth).
Once an employee completes at least six months of continuous service (or 12 months, depending on the size of the employer), they are able to make an unfair dismissal claim. Probationary periods and the minimum employment period operate separately from each other. Some examples below:
Example 1: Zoe is employed under a three-month probation period but is dismissed before the six-month minimum employment period. Zoe has no access to unfair dismissal as she has not completed the minimum employment period.
Example 2: Clare is employed under a nine-month probation period and after eight months, her employer decides she is not the right fit for the position. As Clare has passed the minimum employment period, she is protected from unfair dismissal and could pursue a claim against her employer.
Passing the minimum employment period is the critical milestone for unfair dismissal protection. This means employers must follow a procedurally fair process and have a valid reason for termination of employment in order to protect the business from a potential claim.
What if we extend the probation period?
Extending a probation period is not straight forward. Firstly, if the employee’s employment contract specifies a certain period, then it can only be extended by mutual agreement with the employee. Secondly, and assuming that the employee agrees to the extension, extending a probation period will not exclude an employee from making an unfair dismissal claim if they have completed the minimum employment period.
Is it risk free if we terminate during the minimum employment period?
This is another common misconception. Protection from unfair dismissal commences after six months of service, but there is no minimum employment period to serve for a general protections claim.
An employee whose employment is terminated before completing the minimum employment period is not able to pursue an unfair dismissal application but may decide to claim their dismissal was due to a breach of the general protections provisions in the Fair Work Act (adverse action) or on discriminatory grounds. Examples include, a claim that they were dismissed for exercising a workplace right to use their sick leave or annual leave entitlements, or because they are pregnant.
Therefore, it is important that employers inform the employee of the reason for the dismissal to avoid an assumption that the dismissal was for an unlawful reason. If an employee is not performing at an acceptable standard, and this is the basis for the employer’s termination, then it should be communicated to the employee upon termination to reduce the risk of other claims.
We have an existing employee who is promoted, and the new contract provides a probation period. Can we dismiss them from this new role without risk of an unfair dismissal claim?
As highlighted above, the critical milestone for access to unfair dismissal is six months of continuous service with an employer (or 12 months for a small business). Where an existing employee is promoted to a more senior level and is subsequently dismissed from that role, they will have access to unfair dismissal if they have completed the minimum employment period, regardless of any probation period set out in the new contract.
Further advice or assistance
For further advice or assistance on this topic, or any workplace relations matter, call the Ai Group Workplace Advice Line.
Call 1300 862 217 8.30 – 5.15pm AEST Mon-Fri